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Certificates of deposit (CDs) continue to enjoy relatively high rates, much to the delight of savers. Four consecutive months of inflation and other factors have led the Federal Reserve to pause interest rate cuts for the time being, which has led to CD rates staying steady.
In this environment, long-term deposit accounts such as 18-month CDs help savers grow their investment in a reliable way. Depositing $5,000 in an 18-month CD can earn modest returns at today’s top annual percentage yield (APY), but depositing a larger sum — $20,000, for example — can help maximize your earnings. Below, we’ll calculate the potential earnings.
See how much more you could be earning with a top CD rate here.
How much would a $20,000 18-month CD earn now?
Right now, you can find multiple long-term CD issuers offering rates of at least 4%. Here’s what you could earn from an 18-month, $20,000 at today’s top rates, according to Bankrate:
- 18 month-CD at 4.16%: $1,260.89 for a total of $21,260.89
- 18 month-CD at 4.15%: $1,257.83 for a total of $21,257.83
- 18 month-CD at 4.10%: $1,242.52 for a total of $21,242.52
An 18-month CD can earn over $1,200 via today’s top rates. However, any withdrawals you make from your account could impact your return. Many long-term CDs charge an early withdrawal penalty equal to several months of interest if you pull money out of your account before it matures. So, when you open your account, plan on leaving your deposit untouched. If you want an added layer of liquidity, you can open a no-penalty CD. However, you’ll likely earn a lower interest rate in exchange for penalty-free withdrawals.
Get started with a long-term CD account now.
Should you wait to open an 18-month CD?
No, and that has a lot to do with how the economy could impact rates this year. Over the past few months, some experts believed that the Federal Reserve would cut interest rates in 2025. Rate cuts have become more uncertain lately in the face of a consistently rising inflation rate.
Also, if the Bureau of Labor Statistics reports next week that inflation increased for a fifth-straight month in February, the Fed could extend its rate pause even further. However, if the inflation report offers positive news, rate cuts may be on the way in 2025 and, if that happens, CD rates could end up lower than they are now later this year.
In this environment, locking in an 18-month CD with a $20,000 deposit now provides peace of mind. Waiting to see where rates go likely won’t be worth the risk, and the time you spend waiting is time you could’ve used to open a CD and started earning big returns.
The bottom line
The top 18-month CDs are offering rates of at least 4.10% right now, which means you can earn more than $1,200 at maturity if you deposit $20,000 today. Knowing that you’ve got those returns coming provides peace of mind amid uneasiness about the economy. As you search for a CD that fits your needs, remember to compare rates from multiple issuers and review a prospective CD’s early withdrawal rules.
